A LETTER 


i 


TO 

H.  J.  JEWETT,  Esq., 


JjrMiitenl  of  % &ii«  gailfoajT  Company, 


IN  KETLY  TO  HIS 


) 


(Dated  JZLay  13th , 1875, 


BY 


J A S . B . HODGSKIN. 


TIE  LIBRARV  fir  tjjF 


flpp 


Mm  fork : 

EVENING  POST  STEAM  PRESSES 
Nassau  Street,  cor.  Liberty. 


1875. 


|P  ■ 3S5^ 

f . BrUf  Yh 


76  Wall  Street,  New  York, 

May  29th,  1875. 

H.  J.  Jewett,  Esq.,  Receiver  of  the  Erie  Railway : 

Sir, — Your  appointment  as  Receiver  of  the  property  of  the  Erie 
Railway  Company  relieves  me  from  the  imputation  of  seeking  to  attack 
the  credit  of  that  corporation,  the  dread  of  which  has  heretofore  pre- 
yen  ted  me  from  replying  to  certain  statements  contained  in  the  com- 
munication to  your  shareholders,  dated  May  13th,  1875. 

Commencing  on  page  8 of  the  printed  copy  of  your  statement,  and 
after  referring  at  length  to  the  lease  of  the  Atlantic  & Great  Western 
Railroad  to  the  Erie  Railway  Company,  you  say: 

“ Upon  making  further  inquiries,  however,  it  was  found  that  the 
statements  upon  which  the  lease  was  based,  so  far  as  I was  advised  of 
any  information  having  been  communicated  to  this  Company,  show 
that  for  the  year  terminating  on  the  30th  of  September,  1873,  the  earn- 
ings of  the  A.  & G.  W.  Company  were  $5,315,489.13 ; that  the  ex- 
penses of  operating  and  maintaining  the  road  were  $3,479,522.03  ; 
leaving  an  apparent  net  earning  of  $1,835,957.10. 

“ By  the  terms  of  the  lease  this  Company  for  the  first  year  was  to 
pay  . as  a rental  28  per  cent,  of  the  gross  earnings  of  the  A.  & G.  W. 
Company;  the  second  year,  29  per  cent.;  for  the  remainder  of  the 
term,  30  per  cent.;  and  upon  this  showing  of  the  earnings  and  ex- 
penses for  the  year  1873,  the  apparent  net  earnings  of  that  Company 
would  seem  to  be  equal  to  the  rental  to  be  paid  by  this  Company. 
But  upon  a careful  examination  of  the  statement,  and  from  my  knowl- 
edge of  the  condition  of  the  road  and  its  equipment,  I was  led  to  doubt 
its  accuracy  and  to  believe  that  if  this  Company  assumed  the  control 
of  that  road  and  recognized  the  obligations  of  the  lease,  the  proportion 
i ^ of  the  gross  earnings  to  be  paid  to  that  Company  would  be  a substan- 
tial loss  to  this,  and  result  finally  to  the  detriment  of  both. 

“For  the  purpose  of  determining  the  correctness  of  this  conclusion , 
a thorough  investigation  was  instituted. 

“ In  the  statement  of  earnings  and  expenses  referred  to  no  charge 
for  car-service  was  made,  nor  was  any  made  in  the  report  of  that  Com- 
pany to  the  Auditor  of  the  State  of  Pennsylvania  for  that  year.  Not 
doubting  that  such  an  expense  had  been  incurred,  and  ought  to  have 
been  accounted  for  as  a part  of  the  operating  expenses  of  the  Company 


k 56463 


4 


for  the  year,  and  knowing  that  the  Rolling  Stock  Company  was  fur- 
nishing engines  and  cars,  an  examination  was  had  into  the  state  of  the 
account  between  these  two  companies,  as  set  forth  in  the  report  of  the 
Rolling  Stock  Company  to  its  stockholders,  by  which  report  it  ap- 
peared that  the  amount  due  to  that  company  from  the  A.  & G.  W. 
Company,  for  the  use  of  its  stock  for  the  fiscal  year  ending  September 
30th,  1873,  was  about  $600,000. 

“This  was  subsequently  verified  by  the  statement  of  the  Auditor 
of  the  A.  & G.  W.  Company  to  the  President  of  that  Company, 
November  24,  1874,  in  which  statement  he  fixed  the  amount  at 
$586,164.30. 

“ The  taxes  chargeable  against  the  property  of  a railroad  company 
form  a part  of  its  current  and  operating  expenses,  and  should  have 
appeared  in  the  statement  referred  to,  to  have  given  a correct  account 
of  the  expenses  for  that  year.  Upon  examination,  however,  it  was 
found  to  be  omitted,  and,  upon  inquiry,  the  amount  was"  found  to  be 
$91,529.29. 

“ These  two  items*combined  aggregate  $677,693.59,  both  of  which 
were  undoubtedly  chargeable  to  operating  expenses.  If  the  A.  & G. 
W.  Company  had  owned  the  equipment,  its  maintenance,  with  the 
interest  upon  the  investment,  would  be  a charge  against  the  Company. 
If,  instead  of  owning,  they  elected  to  hire  or  rent,  the  character  of  the 
charge  was  not  changed.  This  equipment  was  necessary  to  the  opera- 
tion of  the  road,  and  to  its  earnings.  These  two  items,  therefore, 
combined  would  have  reduced  the  apparent  net  earnings  (as  given  in 
the  statement  to  which  reference  has  been  made)  to  $1,158,263.51 — an 
amount  much  less  than  28  per  cent,  of  the  gross  earnings. 

“ The  expense  charged  in  the  statement  for  maintenance  of  way 
was  regarded  as  being  exceedingly  low,  and  it  was  believed  that  a large 
amount  which  should  have  been  charged  to  that  account  was  disposed 
of  in  some  other  way,  either  by  charging  to  construction,  or  by  being 
carried  to  some  other  account.  This  belief  has  been  justified  by  the 
printed  statement  of  the  proper  officer  of  that  company,  Mr.  Warnock, 
the  Auditor,  made  November  24,  1874,  to  the  President  of  his  Com- 
pany, wherein  he  states  that  the  operating  expenses  for  the  year  ending 
30th  September,  1874,  included  the  cost  of  all  the  track  material  used 
in  that  year ; but  he  states  further  that  ‘ if  to  the  operating  expenses 
of  the  year  ending  30th  September,  1873,  there  be  added  the  total  cost 
of  material  used  in  the  track  in  that  year,  but  which  was  charged  to 
construction ,’  amounting  to  $671,302.22,  it  would  make  the  total 
operating  expenses  for  that  year  $4,828,527.84,  instead  of  $3,479,522.03, 


5 


leaving  a net  earning  of  $486,961.29,  instead  of  $1,835,957.10,  as 
claimed.” 

The  inference  to  be  drawn  from  the  words  quoted  is  plain  and  irre- 
sistible. You  do  not,  indeed,  assert,  but  you  intimate, » that  the  Erie 
Railway  Company  was  induced,  by  fraudulent  misrepresentations,  to 
execute,  ratify  and  confirm  a lease  the  true  nature  of  which  it  was 
ignorant  of,  and  that  these  fraudulent  misrepresentations  were  made 
by  the  Atlantic  & Great  Western  R.  R.  Co. 

To  show  that  this  inference  is  not  strained,  it  is  only  necessary  to 
point  to  recent  editorial  in  two  leading  daily  journals  (extensively 
copied  throughout  the  country),  in  which  your  report  is,  without  any 
circumlocution,  referred  to  as  describing  an  unsuccessful  attempt  on 
the  part  of  the  Atlantic  & Great  Western  Company  to  swindle  the 
Erie  stockholders. 

Nor  does  the  fact  that  you  only  intimate,  without  distinctly  mak- 
ing, the  charge  of  fraud,  in  any  essential  way  change  the  situation. 
For  it  is  generally  recognized  that  gentlemen  occupying  positions  like 
yours,  cannot  plead  the  indefiniteness  of  their  words  but  are  held  re- 
sponsible for  all  reasonable  inferences  from  their  statements.  Indeed, 
in  the  eyes  of  right-minded  men,  an  insinuation  is  more  injurious  to 
the  person  referred  to  than  an  actual  accusation.  In  dealing,  there- 
fore, with  your  words  as  straightforward  assertions,  I am,  while  defin- 
ing their  meaning,  really  diminishing  their  force,  instead  of  taking 
anything  for  granted. 

Your  words,  then,  if  they  have  any  meaning,  mean  exactly  what  I 
have  stated,  viz.,  that  the  Erie  Railway  Company  was  induced,  by 
fraudulent  misrepresentations,  to  make  a lease  of  the  Atlantic  & Great 
Western  Railroad,  in  ignorance  of  its  true  condition;  that  these  fraud- 
ulent misstatements  were  made  by  the  officers  and  director  of  the 
Atlantic  & Great  Western  Railroad  Company,  and  that,  by  dint  of 
“ further  enquiries,”  “careful  examination,”  “ thorough  investigation,” 
by  referring  “ to  the  auditor  of  the  State  of  Pennsylvania”  and  to  the 
“ Report  of  the  United  States  Rolling  Stock  Co.,”  you  were  enabled 
to  discover  and  expose  these  fraudulent  misstatements. 

If  Geo.  B.  McClellan  and  Abram  S.  Hewitt  are  absent  in  Europe; 
if  Gen.  Lloyd  Aspinwall  and  Lawrence  Wells  feel  too  secure  in  their 
own  reputations  to  need  defense;  if  John  Tod,  Reuben  Hitchcock, 
and  H.  Parsons  of  Ohio,  are  too  far  removed  from  the  scene  to  feel 
aggrieved  ; if  Gen.  J.  II.  Devereux  is  restrained  by  his  own  position  as 
an  officer  of  court  from  resenting  an  attack  upon  his  acts  as  an  officer  of 
the  Company  ; if  these  and  other  well-known  and  honorable  gentlemen 


6 


are,  for  any  reason,  willing  or  constrained  to  allow  your  statements  to 
pass  unchallenged,  I neither  am  willing  nor  can  afford  to  do  so.  I 
was  a director  of  the  Atlantic  & Great  Western  R.  R.  Co.  and  actively 
connected  with  its  management  during  the  entire  period  of  negotiat- 
ing the  lease,  and  up  to  a brief  period  prior  to  its  execution.  I have 
since  represented,  and  do  now  represent,  important  interests  largely 
affected  by  the  lease,  and  I feel  it  due  to  myself,  as  well  as  to  those  in- 
terests, to  meet  with  equal  publicity  your  official  publication. 

I therefore  unhesitatingly  characterize  the  implications  or  insinua- 
tions of  the  foregoing  statement  as  unfounded,  and  a slander  upon 
the  officers  and  directors  of  the  Atlantic  & Great  Western  R.  R.  Co. 

You  say,  “ upon  making  further  enquiries,  it  was  found  that  the 
“ statements  upon  which  the  lease  was  based,  so  far  as  I was  advised  of  any 
“ information  having  been  communicated  to  this  Company,  show,  etc.” 
In  making  so  grave  a charge  as  that  of  fraudulent  misstatements 
against  gentlemen  of  character  and  reputation,  you  no  doubt  took  the 
necessary  pains  to  inform  yourself  of  the  facts,  and  your  meaning  cer- 
tainly must  be,  that  after  using  due  diligence  you  were  unable  to  learn 
of  any  information  having  been  furnished  to  your  Company  except  the 
false  statements  of  which  you  complain.  But  the  Erie  Railway  Com- 
pany has  a board  of  directors,  a competent  secretary,  records  and 
minutes.  Surely  a board  of  directors  comprising  a number  of  the 
leading  bankers,  merchants,  railroad  presidents  and  lawyers  of  Yew 
York,  in  making  a lease  of  a railroad  six  hundred  miles  in  length, 
with  a well-known,  large  and  excessive  mortgage  debt,  notoriously  in 
financial  difficulties,  did  not  do  so  without  enquiry,  without  informa- 
tion, without  knowledge.  Surely  there  was  a board  meeting  on  the 
subject;  there  was  information  furnished;  there  was  discussion;  there 
was  a vote,  perhaps  not  even  a unanimous  one,  and  the  information, 
the  discussion,  the  objections  and  the  vote  are  recorded  on  the  minutes 
of  the  Erie  Company. 

Surely  some  one  or  more  members  of  the  Board  first  suggested 
the  lease,  some  one  or  more  advocated  it  and  gave  reasons  for  their 
advocacy;  there  was  probably  a committee  appointed  to  investigate  the 
matter,  and  that  committee  must  have  reported  and  reported  in  favor 
of  the  lease,  and  that  report  with  all  the  information  and  arguments 
it  contained  must  have  gone  upon  the  records  of  the  Board.  Surely 
some  such  course  was  pursued  in  the  management  even  of  the  ordinary 
business  of  the  company. 

Surely  the  very  statements  you  complain  of  were  not  found  lying 
loose  upon  the  directors’  table,  they  must  have  been  presented  by  some 


7 


one  with  some  explanation  of  their  purpose  and  object;  and  if  so  pre- 
sented to  your  Board,  there  were  at  least  six  gentlemen  members  of  it 
who  could  have  proved  their  falsity  in  five  minutes.  There  is  nor  a 
railroad  man  in  the  United  States  who  does  not  know  that  the  Atlan- 
tic & Great  Western  Railroad  cannot  be  run  for  65  per  cent,  of  its  gross 
receipts,  or  who  would  hesitate  one  instant  to  characterize  a statement 
to  that  effect  as  an  impudent  falsehood.  These  statements,  therefore,  if 
submitted  to  your  Board,  must  have  led  to  discussion  and  argument, 
and  a record  thereof  must  be  found  upon  your  minutes. 

One  of  three  things  must,  therefore,  be  true  : Either  the  Erie 
Railway  Company  has  no  records ; or  the  Board  of  Directors  made 
the  leas®  without  enquiry  or  discussion ; or  else  the  record  will  show 
the  nature  of  the  enquiry  and  the  discussion  resulting  from  it. 

If  the  Board  of  Directors  made  the  lease  without  enquiry,  then  the 
gentlemen  composing  it  are  indeed  more  culpable  than  I,  for  one,  am 
willing  to  believe. 

If  there  was  enquiry  and  discussion,  the  falsity  of  the  statements 
to  which  you  refer  must  have  been  made  instantly  apparent,  and  the 
lease,  if  based  upon  these  false  statements,  would  have  been  instantly 
rejected  by  a Board  of  honest  men. 

As  President  of  the  Erie  Railway  Company,  as  a man  of  mature 
age,  of  a cautious  and  diplomatic  nature,  and  a lawyer  by  profession, 
you  undoubtedly  carefully  examined  the  minutes  and  records  of  your 
company  in  relation  to  this  important  transaction,  before  making  the 
charge  of  fraudulent  misrepresentation,  and  yet  you  deliberately  put 
yourself  on  record  as  stating  that  no  information  was  communicated 
to  the  Erie  Company,  except  the  false  and  fraudulent  statements  com- 
plained of.  I trust  for  the  honor  of  the  gentlemen  who  then  com- 
posed the  Erie  Board  of  Directors,  that  this  part  of  your  statement  is 
susceptible  of  explanation. 

Indeed,  you  hint  at  a possible  explanation  by  using  the  words  “ so 
far  as  I was  advised  of  any  information  having  been  communicated  to 
this  Company.”  But  this  explanation,  if  offered,  could  hardly  be  con- 
sidered satisfactory.  With  the  records  before  you,  with  your  own 
Board  of  Directors  to  refer  to,  after  months  of  the  profoundest  con- 
sideration of  all  the  points  of  law  and  of  fact  involved  in  this  lease, 
before  deciding  whether  to  accept  or  reject  it,  it  would  be  childish  to 
assert  that  you  trusted  to  any  one’s  “ advice  ” on  a subject  of  so  much 
importance.  Besides,  even  if  ill-advised  or  ill-informed,  you  would 
only  be  justified  in  repeating  the  precise  nature  of  your  advices  or 
information.  Whereas,  in  making  or  implying  accusations  of  so 


8 


much  gravity,  you  become  responsible  for  the  sources  of  your  informa- 
tion. And  who,  pray,  so  advised  you  ? 

The  Atlantic  & Great  Western  Railroad  Company  prepares  every 
month  a tabular  statement  upon  a printed  blank  form  showing  in 
detail  the  income,  the  ordinary  operating  expenses  and  the  balance  to 
credit  of  income.  Upon  the  same  sheet  and  upon  the  same  side  of  the 
sheet,  and  right  next  below  the  words  ‘‘balance  to  credit  of  income,” 
there  follow  in  detail  the  “deductions  from  income,”  of  which  the 
first  item  is  : “ Use  of  foreign  cars  and  engines ,”  followed  by  rental  of 
leased  lines,  general  expenses,  taxes,  etc.,  etc.  This  tabular  statement 
or  blank  is  inclosed  within  a printed  framework  of  lines  of  various 
colors,  and  could  not  be  mutilated  without  attracting  immediate  at- 
tention. It  bears  furthermore  inside  the  ruled  lines,  the  heading  : 
“ Statement  showing  the  Comparative  Earnings,  Expenses,  Deductions 
from  Income,  and  Net  Available  Income  for  Dividends  in  each  Month.” 
Copies  of  this  statement  up  to  the  date  of  delivery,  together  with  copies 
of  every  other  statement  prepared  in  the  Auditor’s  Department  (which 
is  not  excelled  by  the  Audit  Department  of  any  road  in  the  country), 
were  placed  by  me  personally  in  the  hands  of  Mr.  P.  H.  Watson,  then 
President  of  the  Erie  Railway  Company,  some  days  prior  to  his  de- 
parture for  Europe,  in  September,  1873,  and  were  accompanied  by  a 
further  summarised  statement  in  my  own  handwriting  of  the  debt  of 
the  company  in  all  its  forms,  with  the  interest  accruing  thereon. 

These  statements,  furnished  to  the  President  of  the  Erie  Railway 
Company,  were  and  are  honest,  truthful,  comprehensive,  explicit  and 
decisive.  There  was  nothing  “ apparent”  about  them,  nothing  requir- 
ing a “ careful  examination”  to  “ test  its  accuracy”  or  “ determine  its 
correctness.”  They  left  no  occasion  to  refer  to  the  auditor  of  the  State 
of  Pennsylvania,  or  to  the  auditor  of  the  Atlantic  & Great  Western 
Railroad  Company,  or  to  the  Report  of  the  United  States  Rolling 
Stock  Company,  nor  to  have  the  statements  of  any  or  either  of  these 
verified  by  the  auditor  or  president  of  any  State,  or  any  company.  The 
statements  gave  the  exact  figures  (only  for  eleven  months)  now  given 
by  you  (for  the  entire  year),  as  obtained  from  your  careful  examina- 
tion and  inquiry,  both  for  the  amounts  expended  for  car-hire  or  rolling 
stock,  $586,164.30,  and  taxes,  $91,529.29,  and  for  materials  charged  or 
chargeable  to  Construction,  $671,302.22. 

These  statements  which,  with  a few  trifling  corrections  (not  vary- 
ing the  result  $10,000),  are  printed  in  the  Atlantic  & Great  Western 
R.R.  Co.’s  Annual  Report,  are  the  official  statements  furnished  by  the 
Atlantic  & Great  Western  R.R.  Co.  to  the  Erie  Railway  Co.,  and  no 


9 


other  official  statements  were  officially  furnished  to  that  Company 
during  my  connection  with  the  Atlantic  Company,  or  up  to  the  nego- 
tiation of  the  lease.  Upon  these  truthful , comprehensive  and  explicit 
statements  the  lease  of  the  Atlantic  Road  to  the  Erie  Company  was 
based , so  far  as  the  Atlantic  & Great  Western  Railroad  Company  or 
its  officers  are  aware  or  are  concerned.  If  any  other  statements  than 
these,  or  any  statements  different  from  these,  were  furnished  to  the 
Erie  Railway  Company,  I call  upon  you  to  produce  and  publish  them ; 
and  if  you  cannot  produce  them,  but  continue  to  be  “ advised”  that 
such  other  or  different  statements  have  been  or  were  furnished,  I call 
upon  you  so  state  who  so  “ advises”  you,  and  who,  “ in  so  far  as  you 
were  advised,”  made,  presented  or  submitted  such  statements  to  the 
Erie  Railway  Company. 

That  statements  similar  to  those  false  statements  to  which  you  refer 
have  been  published  elsewhere  I am  well  aware.  Mr.  James  McHenry, 
of  London,  whose  name  is  also  mentioned  in  your  statement  in  con- 
nection with  the  Second  Consolidated  Mortgage  Bonds  of  the  Erie 
Company,  has  recently  addressed  a circular  to  the  proprietors  of  the 
Atlantic  & Great  Western  Railroad,  in  which  occurs  the  following  : 

“ The  business  of  the  Company  has  been,  I believe,  admirably  con- 
“ ducted  by  Mr.  J.  H.  Devereux,  who  succeeded  Gen.  McClellan,  and 
“ in  the  year  1873,  the  net  profits  applicable  to  interest  and  dividend , 
“ were  $1,920,732.” 

Mr.  McHenry,  in  publishing  anew  this  pitiful  falsehood,  has  not 
even  your  slight  excuse,  “ so  far  as  he  was  advised,”  for  the  same  state- 
ment having  been  once  before  published  in  almost  identical  terms  in 
an  English  newspaper,  the  Board  of  Directors  of  the  Atlantic  & Great 
Western  R.R.  Co.,  on  motion  of  Mr.  Abram  S.  Hewitt,  on  the  22d  day 
of  January,  1874,  adopted  the  following  resolutions  : 

“ Whereas , In  the  statements  of  the  business  of  the  Company  for  the 
fiscal  year  ending  September  30,  1873,  forwarded  by  the  Vice  President 
to  Mr.  James  McHenry,  there  was  a statement  showing  that  the  total 
receipts  of  the  road  amounted  to  $5,315,489.15,  and  that  the  cost  of 
operating  the  road  amounted  to  $3,479,532.03,  showing  an  apparent 
surplus  of  income  over  operating  expenses  amounting  to  $1,835,957.10  ; 
and 


“ Whereas , By  another  part  of  the  said  statement  it  was  shown  that 
the  rent  of  leased  lines,  rental  of  rolling  stock  and  other  expenses 
properly  chargeable  to  income  account,  or  to  be  deducted  therefrom,. 


10 


exclusive  of  interest,  amounted  to  $1,791,569.95,  whereby  the  surplus 
of  income  account  applicable  to  interest  account  was  reduced  to 
$44,387.17;  and 

“ Whereas,  In  the  printed  report  now  submitted  to  this  Board  by  the 
President,  as  received  from  Mr.  James  McHenry,  the  latter  part  of  said 
table  is  omitted,  whereby  there  appears  to  be  a surplus  of  income  ap- 
plicable to  interest,  which  has,  however,  in  fact  been  already  applied 
to  the  payment  of  the  just  charges  above  specified;  therefore 

“ Resolved , That  this  Board  does  not  approve  of,  and  cannot  consent 
to,  the  publication  of  any  report  which  does  not  include  all  the  tables 
and  statements  of  business  forwarded  by  the  President  to  Mr.  James 
McHenry,  and  particularly  all  those  which  state  the  lawful  charges 
and  expenditures  properly  chargeable  upon,  and  paid  out,  of  the  income 
of  the  Company.” 

A copy  of  these  resolutions  was  forwarded  to  Mr.  James  McHenry, 
and  acknowledged  by  him  ; and  this  publication  and  its  repudiation 
were  promptly  brought  to  the  notice  of  the  President  of  the  Erie  Rail- 
way Company.  It  is  scarcely  possible  that  you  have  been  “ advised  ” 
that  an  unauthorized  and  repudiated  newspaper  statement  not  even 
published  in  this  country,  was  the  basis  upon  which  the  Board  of 
Directors  and  the  shareholders  of  the  Erie  Railway  Company  author- 
ized and  made  the  lease  of  the  Atlantic  & Great  Western  Railroad. 

It  may  be  well  to  state  in  this  connection  that  the  lease  of  the  At- 
lantic road  was  not  advocated  by  the  directors  of  that  company.  The 
magnificent  programme  of  Mr.  P.  H.  Watson  on  his  accession  to  the 
presidency  of  the  Erie  Railway  Company  in  July,  1872,  assumed  it  as 
a settled  fact  that  the  Atlantic  road  was  to  be  leased  by  the  Erie.  For 
nearly  two  years  it  was  an  open  secret  to  all  the  world,  including  the 
directors  of  the  Erie  Railway  Company,  and  from  that  time  until  to- 
day the  Erie  Railway  Company  has  controlled  the  internal  and  exter- 
nal policy  of  the  Atlantic  & Great  Western  Railroad  Company,  has 
practically  appointed  and  removed  its  managers,  has  done  a large  share 
of  the  Erie’s  own  business  with  that  much  decried  rolling  stock  which 
the  Atlantic  leased,  which  the  Erie  for  two  years  used,  but  which 
neither  of  them  paid  for,  and  which  you,  sir,  now  put  forward  as  one 
of  the  reasons,  suddenly  discovered  by  your  “ thorough  investigation,” 
and  not  “ so  far  as  you  are  advised,”  previously  known  to  the  Erie 
Railway  Company,  for  not  carrying  into  effect  the  lease  of  the  Atlantic 
road. 


11 


Many  of  the  acts  of  the  Atlantic  & Great  Western  Railroad  Com- 
pany which  precipitated,  if  not  actually  caused,  its  bankruptcy,  were 
forced  upon  it  hy  the  Erie  Railway  Company.  The  Erie,  in  the  spring 
of  1873,  forced  the  Atlantic  into  the  ruinous  purchase  of  its  so-called 
Second  Leased  Lines,  on  the  ground  that  the  success  of  the  Erie’s 
plans  depended  upon  it.  The  preposterous  purchase  of  the  Cleveland, 
Columbus,  Cincinnati  & Indianapolis  shares  was  first  suggested,  urged, 
demanded  and  finally  actually  carried  out  by  the  Erie;  the  poor 
Atlantic  yielding  a most  reluctant  consent  to  the  use  of  its  name  under 
the  threats  of  the  Erie,  which  was  supposed  to  already  practically 
own  the  road,  while  it  was  in  reality  merely  using  it  to  snatch  the  Erie 
chestnuts  from  the  fire.  The  United  States  Rolling  Stock  Company 
for  months  was  prevented  from  putting  the  Atlantic  Company  into 
bankruptcy  merely  by  the  representation  that  the  bankruptcy  of  the 
Atlantic  would  destroy  the  Erie,  and  that  the  lease  of  the  Atlantic 
road  by  the  Erie  would  make  the  Rolling  Stock  Company  whole.  And 
now  when  the  insane  management  of  the  Erie  has  bankrupted  itself 
us  well  as  the  Atlantic,  and  has  done  its  level  best  to  bankrupt  the 
Rolling  Stock  Company  likewise,  it  is  rather  trying  to  see  the  unfor- 
tunate shareholders  of  both  companies  put  off  the  scent  by  the  cry  of 
stop  thief,  in  the  direction  of  the  Atlantic  & Great  Western,  and  to 
find  the  Erie’s  refusal  to  carry  out  a lease  made  and  dictated  by  itself, 
excused  on  the  ground  of  the  sudden  discovery  by  you  that  the  lease 
was  based  upon  statements  “ so  far  as  you  were  advised  of  any  in- 
formation “having  been  communicated  to  the  company, ’’which proved 
false. 

I call  upon  you,  sir,  to  boldly  avow,  to  justify  and  to  prove  the 
damaging  insinuations  contained  in  your  statement,  or  else  to  acknowl- 
edge their  injustice  and  withdraw  them. 

JAS.  B.  HODGSKIN. 


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